Currency union 'the best route'

A formal currency union with the rest of the UK would be the "best route" for an independent Scotland, the chair of an expert group which advises Alex Salmond's Government has insisted.

First Minister Alex Salmond has been under pressure to explain his Plan B
Unhappy legacy?

Crawford Beveridge, chair of the Fiscal Commission Working Group, said their "clear recommendation" was for such an agreement to be reached if there is a Yes vote in next month's referendum.

A formal currency union, if such a deal could be agreed, would allow Scotland to continue to use the pound and have the Bank of England as its lender of last resort if it left the UK.

But the three main parties at Westminster have dismissed this, with Chancellor George Osborne, Labour shadow chancellor Ed Balls and Liberal Democrat Chief Secretary to the Treasury Danny Alexander all stating they would not sign up to it.

Now with just under a month to the vote on independence, those campaigning for the Union have sought to put pressure on the nationalists to set out their "plan B".

Mr Beveridge, who will set out the Fiscal Commission's views on the economic foundations of an independent Scotland in a lecture tonight, said the group had devoted a "considerable body of work" to such issues.

He said: " Since the First Minister established the Fiscal Commission Working Group in 2012, it has been a privilege to work with this group of eminent economists and experts - professors James Mirrlees, Joseph Stiglitz, Frances Ruane and Andrew Hughes Hallett - in setting out the macroeconomic framework that we believe would be in the best interests of an independent Scotland.

"As we approach the referendum this is an opportunity to bring that considerable body of work together, including our consideration of currency options for Scotland.

"Our clear recommendation is that a formal currency union is the best route for both Scotland and the rest of the United Kingdom in the event of an independent Scotland.

"The design of our framework includes flexibility over fiscal and economic levers within an overall position of fiscal sustainability."

Jack Perry, a former chief executive of Scottish Enterprise, insisted that a currency union "would not work for Scotland" and there would be "serious consequences" if the country used the pound without a formal agreement after a Yes vote.

Mr Perry, Sir Brian Stewart, former chairman of Standard Life, Professor Ronald MacDonald and Professor Adam Tomkins from Glasgow University, and Stuart Patrick, chief executive of Glasgow Chamber of Commerce, are all due to take part in a roundtable event focusing on currency organised by the pro-UK Better Together campaign.

Speaking ahead of that, Mr Perry said: " A currency union would not work for Scotland. From day one, Scotland's economy would start to diverge from the UK's, and the currency link would collapse.

"That's why the nationalists need a plan B, and we need to know what it is.

"If it is just to use the pound anyway without a currency union, as they hint at, there would be serious consequences for Scotland's public services.

"Scotland would have to run a fiscal surplus - cutting spending and increasing taxes - to have the cash to make that plan work. Our scope to borrow on the international markets would be very severely limited.

"Instead the nationalists promise taxes would go down and spending would go up, and we would borrow more. This is not remotely credible. Their plan would be disastrous for our economy and catastrophic for our public services - including our NHS."